If you’ve been with your parcel carrier – either FedEx or UPS – for a while, chances are you’re not getting the best rates.
But you can change that calculus if you’re willing to engage their competition, even if you’re not sure you’d be willing to switch.
Think about how consumers interact with cable or satellite companies, insurers, and mobile phone services, even when they’d prefer not to change providers.
Those are industries that spend a lot on marketing to get your business, especially with short-term, strings-attached promotional offers. At the end of the promo period, rates increase and you’re paying more than most of your peers. Then, unless you speak up, your business is treated as a given. Until you make that phone call letting your service provider know that you’re considering a competitor’s offer, that is…
Fact is, FedEx and UPS aren’t much different, except that their industry is consolidated into a duopoly that permits them to take many of their customers for granted. UPS and FedEx count on the fears of their customers – “if I try to negotiate, they can decide not to pick-up my packages” – to prevent having to compete fully.
Take a moment to reflect. Where does your company stand in the eyes of your carrier?
Some of the signs your business is being taken for granted
- You see your carrier rep once a year. Or worse, you’ve never met him or her.
- You’re not sure who to call at the carrier when you have a question or need assistance.
- The carrier is generally unresponsive or slow to respond, particularly when you contract is up for review.
- You hear receive excuses and stall tactics: your rep is on vacation, the manager is out, the pricing team is still reviewing, et cetera.
Willingness to listen is advantageous
Gathering comps during other purchasing decisions is standard buyer practice – consider your home- or car-buying experiences, or even how you choose where to grocery shop. Likewise, gathering competing proposals from FedEx and UPS provides you a fuller, realistic picture of where you stand.
Best Home Furnishings, for example, felt its FedEx agreement came up short. But because it engaged UPS in the process, the company was able to leverage the competitive situation to improve its FedEx proposal. The result: Best Home Furnishings remained with FedEx and is projected to save $500,000. That’s 15% off its parcel shipping expenses.
“It ended up being a win-win for everyone,” said Chief Financial Officer Steve Wahl. “We got our savings, FedEx is further tied to our business as our carrier, and UPS got face time with us they normally would not have.”
Even better, engaging the competition puts your incumbent carrier on notice, a move that instantly earns you more leverage to negotiate competitive rates. Even an action as small as sending a dozen packages a week with another carrier provides you leverage. The barrier to switching on short notice is lowered and it keeps both carriers working to earn your business.
In the end, you could see sizable savings versus your previous agreement.
Andrew Brueckner is VeriShip’s Chief Customer Officer.